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SMALL BUSINESS TAKES STEPS TO PREPARE FOR SLOW RECOVERY

 SMALL BUSINESS TAKES STEPS TO PREPARE FOR SLOW RECOVERY
 DETROIT, Aug. 6 /PRNewswire/ -- Lean and mean. That's how small


businesses around the nation are moving down what's proving to be a rocky road to economic recovery. According to a new nationwide survey conducted by the Gallup Organization for Arthur Andersen's Enterprise Group and the National Small Business United (NSBU), 30 percent of small to middle-market businesses improved quality and 30 percent improved productivity, all within the last 12 months.
 According to the survey, 21 percent of the nation's small businesses expect their sales to decrease in 1992. Twenty percent expect to hang on with no losses or gains in sales while 52 percent expect sales to increase in 1992. Nearly one-third (29 percent) of the nation's small- business owners say one of the biggest challenges to their survival and growth is the recession.
 "Small-business owners must evaluate all alternatives to increase sales, including looking to foreign markets, and making sure their entire organization is customer-focused," said Jeffrey D. Bergeron, partner-in-charge, Arthur Andersen's Enterprise Group. "The recession will ravage a small-business owner who continues to conduct business as usual."
 For example, Bing Steel in Detroit has improved its organization by looking at the situation in a new light. David Olson, CEO, stated, "We focus on our business processes instead of functional areas to identify opportunities for improvement."
 "What happens in the small-business community is a strong indicator of where the rest of the economy is going," said John Galles, executive vice president of the NSBU. "Small business accounts for 40 percent of the gross national product and provides nearly half of all new jobs. So, this is continuing evidence of slow growth in the small-business sector. The nation should take note because of the impact that small businesses have on the economy."
 The survey also found nearly half (48 percent) of small-business owners around the country tried to get bank loans in the last 12 months. Seventy-seven percent of those who applied were successful. That means nearly one out of four was turned down.
 According to the survey, small-business owners are experiencing problems with their banks. Of those who have outstanding loans, 15 percent reported their banks offered unfavorable changes in terms. About one-third (30 percent) said their banks displayed a decreased willingness to lend.
 The survey also found that among those small-business owners with outstanding loans, the most frequent changes in banking conditions for them are providing personal guarantees, filing statements more regularly and reductions in credit lines.
 "Small businesses have been hit very hard in the past few years by banks' tighter lending practices, reactions to bank regulation, and bank closings," said Galles. "Many small-business owners are forced to lay off employees, reduce their operations or close shop when the banks recall their long-term loans or reduce their lines of credit. These are not usually high-risk or even marginal companies, but businesses that have had a consistent reputation in the community."
 But despite predictions of a slow recovery, small-business owners are pushing ahead. The survey found that within the last year, 25 percent developed new products and services, and 17 percent increased their equipment expenditures.
 "Small businesses need to take a new look at the way they manufacture products," according to Bernice Souris, president, Carbide Technologies, Inc. in Fraser, Mich. "The way to meet market demands and lower costs is to reduce the plant's non-value-added activities to free up time for productive pursuits," she added.
 Arthur Andersen's Enterprise Group specializes in providing business consulting, audit and tax services to small and middle-market businesses. It is comprised of a distinct group of professionals specially trained and devoted full-time to meeting the needs of the closely held company. The Enterprise Group is part of the Arthur Andersen Worldwide Organization, a leading provider of professional services with more than 80,000 clients served in more than 300 offices in 67 countries.
 National Small Business United is a private, non-profit association representing small-business owners in each of the 50 states. Its total membership surpasses 60,000 from virtually all service and industrial sectors. NSBU takes a bi-partisan approach to working with members of Congress and other elected officials to improve the economic climate for small-business survival and growth.
 -0- 8/6/92
 /NOTE: The following provides information about the survey:
 THE SURVEY
 Findings
 In addition to the findings reported in the news release, other key findings include:
 -- Fastest-growing small businesses
 -- Banking issues facing small business
 -- Investment tax credit restoration
 -- Top challenges for growth/survival
 -- Issues facing family-owned small businesses
 Methodology
 In March 1992, Arthur Andersen's Enterprise Group and National Small Business United (NSBU) contracted with the Gallup Organization, Inc. of Princeton, N.J., to conduct a national research survey of small and middle-market companies.
 A mail survey was used to gather data for this project. Surveys were mailed to a total of 6,000 small businesses. In order to learn more about the different segments within the small-business population, the mailing was divided so that 2,000 surveys were sent to each of the following groups: businesses with one-20 employees, businesses with 21- 100 employees, and businesses with 101-500 employees. Six hundred thirty-four completed and usable surveys were returned to the Gallup Organization by late June 1992.
 To ensure that the results represented a proper distribution by company size, the results were weighted using information from CACI Marketing Systems of Arlington, Va. CACI Marketing Systems uses the Bureau of Economic Analysis and County Business Patterns, cross- referencing the information with Dun's Marketing Services.
 Results Booklet
 Media representatives who would like to order the survey results booklet, "Survey Results of Small and Middle-Market Businesses: Attitudes, Issues, and Outlook," should contact Doug Armstrong at 312-507-2147.
 CONTACT: Mary Guregian Jenkins of Arthur Andersen, 313-596-7875; or Marcia Bradford of NSBU, 202-293-8830/ CO: Arthur Andersen's Enterprise Group; National Small Business United ST: Michigan IN: FIN SU: ECO


SM -- DE005 -- 7428 08/06/92 08:59 EDT
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Date:Aug 6, 1992
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